Playing the Popping Housing Bubble

Most people investing around the popping housing bubble have been doing it directly, via the homebuilders themselves. Some investors are beginning to play with the CME real estate futures (plugged in today’s WSJ by Bob Shiller), but there are other options.

One possibility is via the housing bubble media. An entire home improvement media has appeared around the housing bubble, with such programs on seemingly non-stop, both on regularly network television, as well as on the special cable channels, like HGTV.

With the preceding in mind, I have been idly looking at the E.W. Scripps (NYSE:SSP) company, which operates HGTV, the Food Network, the DIY Network, etc. It is currently trading not far from five-year highs, and network advertising represents around 25% of overall revenues.

Comments

Wow. There are surely better instruments available than that.
Drive along the freeways leading out of any growing major metropolitan area in the US and you will see they are encrusted with an amazing number of furniture stores. This business is going to collapse if real estate cools.
Also, what about mortgage banking? An intensely cyclical business, which turns out to have become riddled with fraud (shocked! I’m shocked!) every single time a cyclical real estate downturn occurs. Don’t try to tell me this time will be different (unless by that you mean more severe than usual).

Interesting idea, although I’d be concerned about the current direction of the Food Network, which is probably their highest earning network. As their flagship shows/stars (Emeril, Rachel Ray, Bobby Flay, Iron Chef, Mario Batali, Alton Brown) are beginning to lose their luster (and ratings), they need to find the next batch of stars quickly. It’s hard to imagine them being able to turn their whole schedule upside down and find another 6-10 great shows all at once. I’d almost argue that right now we are on the tail end of a Food Network bubble, as it’s been almost inexplicably popular for the past few years.

Before you idle too much, remember that Scripps is not a newbie to the world of advertising -they’ve seen a few cycles, actually. They’ve also done smart things like snap up Shopzilla on the cheap.
And if you can’t take the time to watch any of the shows on the networks you deem vulnerable, let me remind you of one of the more beautiful words in the publishing business: “evergreen”